Building Your Down Payment

Many buyers can easily qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Start here

Cut expenses and save. Scrutinize your budget to discover extra money to go toward your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell items you do not need and find a second job. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you really need and the things you could be able to put up for sale. You might have desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. You might also research what your investments could bring if sold.

Tap into retirement funds. Investigate the provisions of your specific plan. You may borrow money from a 401(k) plan for you down payment or make a withdrawal from an IRA. Be sure you are clear about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for assistance from generous family members. First-time buyers somtimes get help with their down payment assistance from thoughtful parents and other family members who may be eager to help get them in their first home. Your family members may be pleased to help you reach the goal of buying your own home.

Research housing finance agencies. Provisional mortgage programs are provided to homebuyers in specific situations, such as low income purchasers or future homeowners planning to improve homes in a certain part of town, among others. Financing with this kind of agency, you probably will get an interest rate that is below market, down payment help and other perks. Housing finance agencies may assist you with a lower interest rate, get you your down payment, and provide other advantages. These non-profit agencies were formed to boost home ownership in specific neighborhoods.

Learn about low-down and no-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling buyers who will not qualify for a typical loan, to obtain a mortgage. Interest rates for an FHA mortgage are generally the going interest rate, but the down payment amounts for an FHA loan will be below those of conventional loans. Closing costs may be financed within the mortgage, and the down payment may be as low as 3% of the total amount.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. While the VA does not actually issue the mortgages, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you some of his own equity to help you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Typically you will pay a somewhat higher interest rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your brand new home will be well worth it!

Need to talk about the best options for down payments? Give us a call at 407-834-3377.

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